When I first got involved early stage investing, I read everything I could find on start-ups and the venture capital world. I studied lean start up principals and subscribed to every major blog out there. I was a sponge soaking it all in and I was on a steep learning curve. I also found a surprising number of things from my corporate career that translated to the early stage world.
My deal-making history made the nuances of venture funds and early stage financing terms relatively easy to understand. The rollercoaster ride of being at a commodity trading firm owned by private equity during the global financial crisis prepared me well for the uncertainty of start-up life and the extreme pace of change. My experiences of standing up a mature business from a spin out, launching new business lines, and expanding international offices taught me about startup operating basics. My early career of being a compensation consultant helped me to navigate conflicted stakeholders in the Board room. And, assessing and pursuing several exit paths at Gavilon before we finally orchestrated a successful multi-billion dollar sale, gave me a unique perspective on how to optimize exits.
As I gained more early-stage experience, there was another pattern that was familiar from my earlier experiences but being left out of much of the dialogue online – it’s the tendency to overlook the elephant in the room issues that everyone knows are sabotaging success but no one wants to talk or write about it – at least not in public. Some examples are:
- The herd mentality of early-stage investors
- Investor needs, rather than the businesses financing needs sometimes driving a startup’s fundraising strategy
- The tendency for Board meetings to become a series of pitch meetings because the investor sitting in the Board room is the most likely source of funding for the next round
- The product, sales strategy, channel partners, team etc. is wrong but we do nothing because we don’t know how to fix it
- Founder conflict and founder/team burnout
- The personal relationships that are ruined or changed as founding teams scale
- The real impact of personal egos – whether that be the founders, the joiners, the Board or the investors
These particular types of elephants are the things that can slow down or completely derail even the most promising startups. These are also the challenges that many entrepreneurs and investors talk to me about in one-on-one conversations but tend to avoid writing and discussing openly.
There are many good reasons for not dragging these issues into bright sunlight. First, we do need to respect each other. Everyone has ego and personal motivations that shape their behavior – we would be inhuman if we didn’t and we need to respect where others are coming from. Second, many of these issues are confidential in nature. This means that sometimes in order to speak openly we need to describe the facts in abstracts rather than specifics. Abstracts are not nearly as compelling.
Even recognizing those challenges, I know that there is way to engage around sensitive topics that will remove obstacles and create awareness and alignment. I know that naming and dealing with challenges directly is a way to move past difficult issues more quickly and create velocity for companies. I also know that tackling the issues with respect and integrity is the key to actually addressing the issues rather than calling someone out in a derogatory or embarrassing way. And sometimes, humor and laughter is the best way to work through a tough issue.
This is what I was known for in my prior consulting and corporate roles – being the truth-teller and problem solver. It is one of the things that set me apart and allowed me to gain the trust of those around me. It is what allows me to see points of view from multiple stakeholders. It is why I was tapped to lead some of the most challenging projects in my prior roles. It is why now I am often called on to work closely with some of our portfolio companies as they face difficult challenges.
This is why I am launching DWVC. Not every post will be so deep or heavy – but I won’t shy away from uncomfortable situations. I will write about the real challenges and conversations happening every day. I hope you enjoy!
This post was originally published on DanaWright.vc.